U.S. Producer Price Index Edges Higher in July; Core Price Index Strengthens

The Producer Price Index for final demand increased 0.1% (2.2% y/y) during July after rising an unrevised 0.2% in June, according to the Bureau of Labor Statistics. A 0.2% rise had been expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services rose 0.3% (3.3% y/y) in July after rising 0.1% in June, revised from no change. The PPI excluding food & energy was unchanged (+2.4% y/y) after rising 0.3% in June. A 0.2% gain had been expected.

Final demand goods prices excluding food & energy rose 0.2% last month (2.1% y/y) after holding steady in June. Finished consumer goods prices edged 0.1% higher (1.9% y/y) after remaining unchanged in June. Core nondurable goods prices rose 0.1% in July (2.4% y/y) after remaining unchanged. Durable consumer goods prices improved 0.1% (1.2% y/y) after remaining unchanged for two straight months. Capital equipment prices rose 0.2% in July (2.5% y/y) after three straight 0.1% increases, while government-purchased goods prices rose 0.3% (2.7% y/y) following two months of no change.

Services prices for final demand fell 0.2% (+2.6% y/y) in July, after two months of 0.4% increase. Trade services prices fell 1.3% (-0.7% y/y) after a 1.4% gain. Trade of finished goods prices weakened 1.4% (-1.0% y/y) and fully reversed the prior month’s increase. Prices for final demand transportation and warehousing services rose 0.4% last month (0.6% y/y) after a 0.1% decline. Services prices less these costs increased 0.3% (4.3% y/y) following a 0.1% uptick.

Final demand energy prices rebounded 1.9% last month (0.3% y/y) after a 2.1% decline. Gasoline prices jumped 2.8% (-4.9% y/y) after falling 5.4% in June. Home heating oil prices strengthened 9.6% (-1.8% y/y) following a 5.0% decline. Electric power prices weakened 0.8% (+2.4% y/y) after falling 0.3. Natural gas prices increased 0.9% (1.0% y/y) after rising 1.9% in June.

Food prices rose 0.6% during July (1.7% y/y) after edging 0.1% higher in June. The gain reflected a 10.3% rebound (4.4% y/y) in fruit & melon prices following two months of decline as well as a 5.4% drop (-17.9% y/y) in fresh vegetable costs which came after falling for three straight months. Grain prices fell 6.2% (-27.9% y/y) and processed fruit & vegetable costs rose 0.8% (4.0% y/y). Beef & veal prices rose 7.7% (5.2% y/y) after rising 2.0% and fresh egg prices declined 8.9% (80.4% y/y).

Construction costs rose 0.8% in July (1.4% y/y) after rising 0.4% in June.

Prices for intermediate demand processed goods rose 0.7% (0.8% y/y) in July after falling 0.2% in June. Processed energy goods prices rose 2.8%, while food prices increased 1.8%. The index for intermediate demand unprocessed goods increased 3.6% (3.2% y/y).

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.